REX March 2 - Karl Dean and Brent Kleiss

0:00This is a podcast from Rover. Rover, Rover will exchange with Netspeed. Internet till the cars come on. Good day, Roe, welcome into the Rex daily podcast. For Monday, the second of March, I'm Dom George, and the show brought to you by the team at Netspeed. Oh, 800 Netspeed, Netspeed.net.net.nz Coming up today on the program, Karl Dean, is going to join us in just a moment. Here's the federated farmers' dairy chair, and he's going to be talking about the government changes to Kiwi saver rules. This is going to allow first-home withdrawals for people buying their first farm, and also for workers in service tendencies as well. So this is good news. They've been campaigning on this for quite a while. I believe it was actually an election promise, so we'll find out from Karl exactly what that entails. Also, a wider look at the dairy sector as well. Obviously, things pretty good at the moment, so we'll get the lay of the land with Karl Dean on all of that. Plus, we're going to be talking with Brent Klyce as well. The chief executive of NZ Pork, they're asking the government

1:00or suggesting that the government needs to strengthen its proposed planning laws to ensure New Zealand's pig farmers can continue to produce pork. He says that there are still areas where the legislation needs to do more to protect productive rural land. So, Brent Klyce, also on the program today, that's all coming up for you here on the Rex Daily Podcast. Enjoy. Rural exchange with Netspeed. Broadband for the land. Obviously, the current Kiwi Saver rules that you have to live in your first house, if you're going to use Kiwi Saver to buy it, obviously for farm workers who live on the farms where they work, that locks them out from accessing that Kiwi Saver. But some good news. Federated farmers are celebrating a major win. The government's finally allowed farmers of farm workers to use the Kiwi Saver funds to buy their first home or farm Karl Dean is the national dairy chair of feds and he joined us now to have you back on. Yeah, I'm not a bad dog. It's been a pretty busy week to get this all underway and it looks like the government was finally coming through with it.

2:02Well, certainly does. And I have to say as well, you've popped up a lot in the last 24 hours with media interviews. This seems to be one that people are universally applauding. Yeah, I think it's a long time coming, especially for farm workers and for rural communities, when we think of, now we still have police, we still have teachers, nurses that are still in rural areas, are still got those service tenancies. So it is a good result for those people as well and the defence force. Yeah, exactly. Yeah, that's right. It extends further than just farming obviously. So what will actually unlock for people who aren't overly familiar with the details of it? What can you tell us? So what it unlocks is the fact that if someone who's in a rural community and a service tenancy wants to purchase their first home, currently they're unable to, because they would then have to move into that home. So it allows them,

3:02I don't know if they have to move into that home for six months, at which point they could move back to the farm. So that's what people have been doing for the last ten years. So this pretty much just gets rid of that loophole and makes it so that people can buy that first home. They may still use it as an investment, but at the end of the day they're not able to live in it, because they're service tenancy requiring them to live on farm or may be on the defence force base in the local town. So it just really fixes that little loophole that people are using anyway. Yeah, it's a good point. It just tighties it all up. So the thing about it as well was I think this was pretty much, was this a campaign promise I think effectively or it's been on the cards for a while hasn't it? I know there's been groups and people that have been, you know, really trying to make sure that this did actually become reality. Yeah, so this has been something that's been coming up for the last five years that we've had from our CFR council started it.

4:04And it's got right through our National Council and then we've got through. And it was promised by the National Party three years ago on the election campaign. And so now it's just a delivery on that particular promise. It is indeed. And obviously the bill will go through the house later this year. And we'll be obviously making submissions to support it and making changes that we see needed. Yeah, it's a good point as well when you talk about it. It's not just, you know, farm workers, but as you say, it's the people like the rural teachers, it's the country cops. You've mentioned the defence personnel as well but just the nature of the job requires that you effectively live in a place that isn't your own. You know, it's part of the job, so to speak. So it really has unfairly locked a lot of people out of accessing that key. We save it for first home, first home purchase. Yes, it is. And the minister yesterday did actually say, you know, there's probably about three to five thousand workers who are in service tendencies outside of farming.

5:06And a lot of that was actually the defence force. And when we think of wireroot, you're probably not going to go and buy a house on wireroot just because you work there. It's a lovely place, but it is primarily the army base. But you might want to buy a house in town, or something like that, which is a bit of a commute if you try to do that every day. Yeah, that would be mildly unrealistic to say the least yet. So yeah, it's obviously, I've read some accounts of younger farmers who are very in support of this, obviously. So have you had any sort of initial feedback from people who this might affect? Yes, so far we've had some great feedback from young members who I did expect some yesterday, the announcement as well. And some of them were very keen to now increase the Kiwis Aver. Because they'd actually been putting the minimum amount in Kiwis Aver and other amounts in other savings accounts. Because they knew that they couldn't use Kiwis Aver for anything in their potential career path.

6:07So it's a good chain for that. Yeah, it certainly is. When it also comes to, you know, I guess like sort of syndicates and things like this, are there any sort of rules around that or trusts in bits and pieces? Yes, so the other key change that happened there was the fact that in the past you couldn't use your Kiwis Aver to buy your first farmer if it had a house on it. If it was going to be your primary place of residency. But that farm had to be purchased in your name. Now about 80% of farms are not owned by the owner operator. They are owned by a company or a trust. So the new rule will reflect the fact that you can purchase your first farm in a company as long as the director or the directors are the principal shareholders. So there's that big key change because, you know, at the end of the day you couldn't use Kiwis Aver unless you carved off the house, brought that by yourself. But then you had to go and take your own home loan out to get it and off.

7:08Just a lot of rhythm roll that just really levels in that. Yeah, that's tidied up a massive area by the sounds of it. Yeah, all just, as you say, there were kind of ways to do it. But yeah, just the tangled web of legal ease and, you know, document filling out and all that sort of stuff. I mean, yeah, it would just get to the point where people would just be like, it's just too much of a, too much of a, it's in the too hard basket, isn't it? And this kind of takes that away to a degree. Yes, it does. And we may see now an increase in young rural people putting money into Kiwis Aver is a result of knowing the fact that they can get it out one day to buy that first time. They can get it out to buy that first farm I registered in business under a company. Because at the end of the day, that's just the structure that farming wood is under. There is obviously, it all does come down to primary dwelling as far as I can ascertain. That's still kind of the key to the, to the whole thing.

8:10Yeah, they've unlocked, you know, the mechanism by which to access said first home. However, I guess if, you know, there are a lot of people who might buy a block of land, you know, as some sort of asset or something like that. You know, and they don't necessarily have a home on it. They may never intend to. So it's not, it's not for that. I know a lot of farmers try and get into it by sort of incrementally increasing assets over time. But that won't cover it. No, it still does have to be a primary place of residency. Still better than nothing, though, right? It is still better than nothing. And like I said, it's a huge win for the rural community as well as farmers. So Carl, the dairy sector at the moment is writing something of the highest. And if you look at the Fonterra asset sale, you look at the global dairy trades. What is the mood around the dairy sector at the moment? I imagine it's pretty buoyant currently.

9:13Yes, it's probably one of the best dairy years has been in quite some time. There may be a grass growth in autumn this year. And summer has been astronomical. And it's great for the pastoral sector. We don't often see good grass growth with good high prices. But it does make us think, you know, maybe they did predict two years of good money. Maybe we're right. Maybe it'll drop after this year. But there is potential that maybe we're seeing a new level after that 30% on farm inflation we had a few years ago. Yeah, notwithstanding, of course, yeah, obviously input costs. What can you tell us about input costs at the moment? I haven't done anything too much on it. I mean, they'll still be relatively high, I imagine, historically speaking. Yes, I mean, fertilizers definitely not gone back down to the $500 a ton it was. It's still sitting around the thousand at the moment before the war took off yesterday. So, you know, who knows what that will affect that will have.

10:15But I think what's really important is that, you know, those costs did lift by 30 to 35% over 12 to 18 months. They didn't come back. And now it's just almost the income side is caught up. For everyone, our arable friends in the cropping sector. You know, the red meat sector is doing awesome. And so is the dairy sector. Yeah, you're right about the poor old arable guys. Yeah, doing it tough at the moment with spoken to a few people in that regard. You mentioned, yes, the war kicking off or whatever it is, who knows. But I've already seen predictions that, you know, the fuel is going to go up and things like that. I mean, yeah, these things we can do nothing about. I suppose you just have to watch with a keen eye and, you know, sort of see how it plays. But there could be some, we never far away from some sort of, you know, tumultuous sort of a vendor. Are we really?

11:16No, we can't control things that outside our own country. That's what normally seems to happen is something overseas happens, whether it's COVID, that's slowly spread throughout the world or a war somewhere. So prices are unfortunately lead by the US in places when it comes to red meat and dairy if they increase production price goes down. At the moment, I think they're pretty short on on that red meat sector. What we can control, I suppose, is the production out of this country. And I note that was it the figures for dairy insides annual state of the dairy nation report. That was pretty favorable with producing a heck of a lot, aren't we? Yes, I mean, it was a pretty good result. Slight increase year on year for production per cow. I do believe we won't ever see peak cow numbers hit again. We hit them back in, it was 2015 because it has been land use change and things like that.

12:21That have taken dairy farms out of the system. There's dairy farms going into horticulture all the time in the North Island. So we won't hit peak cow again, but we've got to keep, you know, that production up. Because that's what the expo growth trajectory was, is that dairy will continue to produce a high amount of milk products and at a high quality. So we're winning on those fronts. What's that down to the fact that we've hit peak cow, but is it just better herd testing? What do we genetics, that sort of thing? Yes, a lot of it comes down to genetics feeding. We've had, like last year, was a really good season for most of the country. This year's looking like another one prior to that. We had two or three years of drought since certain parts of New Zealand. We had hard seasons. It wouldn't be unexpected for that to return. And then we might be down in the doldrums if we're damp production, but these things are cyclic. And you know, when it looks really good when we're up on a poorer year than you before.

13:26But this year might be, we might be up again when this report comes out next year. We have to wait and see. But the weather can change a lot between now and May when a lot of farms will dry off. Yeah, and I see. Well, I see there's a bit more settled weather on the way as well. Actually, you know, so that may indeed come to fruition. Everything seems to be a bit later at the moment, doesn't it? You know, the season seems to be pushing out a bit further. Yeah, I wish I could say that down in Canberra today. I think it's about eight degrees. It's like an alice leaf all night. It's absolutely torrential and terrible weather out there today in Canberra. It feels more like an early onset of winter than it does early onset of autumn. That's for sure. Yeah. Well, you're right there. We're freezing morning here in central Otago as well. Yeah. Yeah. I hope that's not quite the case. It's interesting to see you met you before in terms of a lot of the dairy farms in the

14:26North Island sort of switching land use. Would the dairy conversions happening down in sort of Canberra way, your way, is that not going to mitigate that in terms of herd numbers and things like that? It might stop the, you know, like we might see an uplifting count numbers for this season and next season, but it won't be to the amount that we've already dropped over the last decade. Like I said, we probably won't have another peak cow with reach at that point and now it's just going to be about right farms in the right place doing more efficient production. There's quite a bit of activity in the Canberra region though and there's a regard though, isn't there? Yes, there is. There's, I think, somewhere around the mid-twenties in terms of farms being converted throughout the country, with obviously making sure that the environmental impact is better than what the previous land use was, so that they're actually, you know, leaching less nice nutrients than the previous land use, so that's key.

15:27Mmm, that's interesting and that's not something that everyone knows. No, a lot of people forget the fact that in Canberra we still are under land-regional water plan, which means that we cannot change land use unless we actually, the environmental impact is less than what it currently is and that's miserable as a nutrient modelling or things like that, so. Do you think there's a hangover from the duty deriying days and the campaign back whenever it was sort of around what the 90s, I think, from memory that, you know, people just automatically think, oh, deri-conversion, naturally bad for the environment. Do you think there's a bit of a hangover from that? Oh, I think we've seen that hangover in the regional councils for probably the last decade and a lot of that, you know, be frank about it. A lot of it's because those people who that campaign was aimed at the teenagers and the young adults of the day, are the people in charge now making those decisions, which is pretty unfair to have a biased view, but we're slowly working away and, you know,

16:32the science is slowly proving that improvements are being made. It's a fascinating landscape that at the moment, as you say, there's a lot being done in that area, then you see that the government keeps getting criticised for, you know, walking back, you know, all the environmental gains are interesting. At the moment, it seems to be there's a dividing line and you're on one side of the other, which is hardly surprising, because that's kind of what we do with everything these days. Yes, there's no gray area anymore. It's, like, you see, the other one side of the other, and trying to educate everybody of what the benefits of deri are and how many deri farmers have been planting waterways and looking after their environment, because, like all landowners, we want to leave this land in a bit of a place and a bit of state than what it was when we turned up, and for future generations. So it's really important that people remember that farmers won't look after the land, because at the end of the day, the land is what looks after them. Yes, exactly, and it's not like you're going to want to put your, you know, the next generation

17:36on a bit of land that's, you know, riddled with problems, is it, you know, it's just not a natural thing to do, but it's hard to get the point across, I suppose. Yes, it's like anyone, you know, you don't want to have your kids at a worse position than what you grow up in, so it's that whole rhetoric, and that continues right through into all aspects of farming, and I think people just have to remember that. Yeah, I think that's a really good point. So you've mentioned you've got a bad spell of weather at the moment, but in general, though, for the Canterbury region, how's summer fed for you guys? Yeah, like summer has been pretty much since, or if we think about the sense of December, it's been quite, quite wheat, I suppose, it's a wheat summer, so it means that grass has been growing, and it makes great for most Canterbury. Lots of green grass around, lots of feed, like I said, the only ones who are the Arab guys who want that sunshine, the farmers who actually, dairy farmers have been doing really well, and long may it continue into autumn, we just probably want the sun now,

18:40as the days get a bit cooler, the sun and the lesser rain, and we'll probably keep growing good grass, so time will tell. Now because you have a, you're a 50-50 Chairman, Alka Wright, and at least in there. Yes, yes, yes, but you've also got, I think, cropping beef cattle and some shedding sheep as well. You've got some milk chips, I think, there. Yeah, and it's been a great year for stock sales so far this year, you know, I remember a couple of years ago, we were probably selling prime lambs for selling stores for now, it's just absolutely crazy money, it's a good year to finally have for the sheep market in the red meat sector, but yeah, the cropping, we just don't talk about the cropping at the dinner table at the moment, we just move on, look at the other bits, and you can't win everything at once, and it's the idea of the system, so. Yeah, exactly, that makes perfect sense. Yeah, how do you find the Wilkeshire's, by the way?

19:43Yeah, the Wilkeshire's seemed, well, they're pretty good at knocking the fly stroke, that's the main one for me as a dairy farmer, so I don't want to have to deal with curfewing and sharing as much as I can, so that's probably the big one, and then, growth rate, we're just still working on trying to make sure we get the right ramps over them, and we're trying to improve that flock as we go to get the lambs that we want out of them. What's next on the agenda? You've fought this battle and seemed to have won that one in terms of the Kiwi Saver, what's around the corner? I think, well, we'll look towards our sheer farming council again and see what they come up with in terms of what's needed for the youth in the next generation of the sector, and see what they have on the table. I know that they've got a council meeting tomorrow, and no doubt they'll come up with some ideas there of what they think needs to be changed in the sector to make things better for the next generation. Fantastic, Carl, I think when we first spoke last year, when you just sort of come into

20:47the dairy chirole from Richard McIntyre, I think you were just sort of looking to continue momentum, safe to say, I suppose, in a lot of areas that momentum has been continued? Yes, I'm going to have had some good wins. I'm so Richard did the banking, feds have continued on with that and got good results. We've had good results out of the immigration that worked at Richard's time as well, we're just going to keep it on. And obviously, this is the biggest one so far of getting the Kiwi Saver built across the line, and changing the future for New Zealand farmers and rural communities. It'll get past the legislative process, why not, I'm pretty sure, can't see too much. Yeah, I'm pretty sure it's got support from most of the coalition partners, and that's the key thing. Good man. Hey, listen, I do appreciate your time. Thanks very much. Now, thank you very much, Tom. All ended, Borker, saying that the government needs to strengthen its proposed planning laws to ensure New Zealand's pig farmers can continue to produce pork.

21:50Brent Clice joins us now, chief executive of NZ Port, nice to see you, mate. I feel like we've had this conversation before, but you're still beating the drum on it and fair enough to, I suppose. It's a little different this time, I think. It's certainly got that same message, though, of just making sure that new rules, new regulations, legislation, things that affect the rural sector, and in particular, us at an import production, are for purpose, and they give certainty to farmers, that's the main point here. It's making sure that they have certainty to invest, and they know where the future is. Yeah, that seems to be the message coming from most of the primary sector organisations. So I'm sure you're up to speed with what most people are saying about these proposed changes to the RMA. Yeah, and it's a pivotal period for us. We've got a sector that's coming through significant regulatory change, including our welfare treasonry. It's got a 10-year period there. And farmers are just looking for that certainty and clarity to justify reinvestment and modernisation of their facilities, of their buildings.

22:53And so, to make sure that there's good growth and productivity, we just know that planning, certainties, essential that farmers know, that if they put up a new building, well, they put in a new effluent system, well, they expand their business that five years, 10 years, 15 years time, it's not going to change on on a game, so really important. Well, makes perfect sense. So the intent of the two new bills that are coming in to replace the RMA, are you broadly in support of those? Yeah, we are. Anything that creates a bit of more simplicity, that drives, that protects the core purpose of rural land for food production. It's about domestic food production too, not only for our exports, but for reacting to the fact that food prices and the certainty for the New Zealand consumer, that they're going to be able to access to the things that we're really good at producing here, is unrestrained. So, yeah, I think for the pig sector in particular, we're looking at imports

24:00being above 60% at the moment, and we shouldn't make it harder to produce locally. Yeah, we want to reduce those constraints that are planning barriers that create, otherwise imports and competition will fill the gap. Is there anything specific that you're seeing in the draftly dislation that is particular cause for concern from a New Zealand pork perspective? Yeah, and a lot, I know that if you'd farmers and some of the other organisations will cover the broader aspects, but particularly for us, reverse sensitivities, farmers, and the urban world don't always get along, but we're just saying that there shouldn't be any kind of penalisation of farmers because development moves closer to them. Farming has normal, lawful effects, there's noise, there's odor, there's transport movements, that's part of rural life, and we just want the legislation to reflect that there's a fairness to that in order to operate, in order to feed the world, create these things that are in affordable rate, that those types of

25:03conflicts are given due consideration and fear of flexion. And then one other thing that we think is really important, there's got to be a non-negotiable around providing water for animal health and for biosecurity needs, so that's both drinking water, but also cleaning water, particularly in the pork sector, is a lot of cleaning, housing down the facilities to make sure that disease and things don't take hold, so really fundamental. So you're talking in that instance about, and I think it's raised a week or so ago, basically something like a water tax, which fed to saying avoided at all cost. Yeah, I think you can talk about resilience and then constrain the tools, you can't talk about resilience and then constrain the tools farmers need to operate responsibly, so yeah, certainly. Yeah, yeah, and as for the urban encroachment part, it strikes me as funny when people have this notion of, you know, buying a piece of, you know, sort of semi-rural land, and

26:03you know, being with nature, et cetera, all that sort of thing, Brent, and then, you know, complain about, as you say, the stock standard always has been aspects of farming, like it's in convenience. Well, you know, in the first instance, know what you're signing up to, when you buy a piece of land, let's say next to a farm, I mean, come on. Yeah, and don't get me wrong, farmers benefit from that too, you know, the value of their land, it's certainly benefited by the desire to go and live in areas like that, but yeah, there's needs to be a fairness in a sensible way of dealing with those reverse sensitivity issues, the protect food production. Yeah, yeah, 100 percent, I think, and that's got to be at the core of everything, which is kind of what you're saying. So there was a group of New Zealand farmers send an open letter to the Prime Minister and other party leaders. And what they're basically demanded here is an end to the double standard that allows animal products banned from domestic production to be imported

27:05into New Zealand. So firstly, are you aware? I think they launched it at Northland Field days. You aware of this? Yeah, we were aware of that campaign. It's something we've been asking for too for a long time now. We've had about five to ten years plus of debate over animal welfare standards in New Zealand, especially in the pork sector. And throughout that, we have asked for the standards that are applied to pork producers here and the products they ultimately put on the shelves in supermarkets to apply to those that are imported from overseas. Just to even that playing field, there's a cost associated with those standards. And I think the New Zealand consumer very clearly has indicated a support for the standards that we farm under in New Zealand. And it should apply to imports that are coming in from overseas too. Otherwise, you just export the issue, the I guess the poorer outcomes that we're not supportive here in New Zealand. So

28:06yeah, look, that campaign's really nice to see it's certainly something that we've been saying for a number of years too. Yeah, and it's really interesting because we've always spoken about the 60% in terms of import volume that comes into New Zealand or 60% of the total that we have comes from somewhere else. And I think you might have alluded to it just earlier that number now, I see 63. So it's creeping up as well, which is places like Canada, US, Europe, they still allow, you know, sour stalls and things like that, which is I guess the nub of the issue really. Yeah, and we're all for choice. We're a free trading nation, I get that, but you run the risk of production in New Zealand becoming more and more unaffordable as standards are applied only for it to be replaced by things that, you know, to replace by products that are produced under conditions that we'd find unacceptable here. So you mentioned sour stalls, we've

29:10banned them a number of years ago in New Zealand. There's things like castration without pain relief. The use of antibiotics as growth promotants is now, we've got 10 years in the industry to once again raise the standards of production around welfare measures. And at the end of that period, it would be nice to know that this bacon or ham appearing on the shelf beside what we're producing here has to do the same. Level playing field effectively. Yeah, yeah, with the RMA. So that's been interesting. Just for listeners, by the way, it's called the Fair Four Farmers campaign. And so it was launched that Northland field days makes a lot of sense actually. I can see why, you know, that has been launched. So with the RMA stuff as well, it seems like they've got a hell of a job on their hands here. No doubt, have you submitted yet? Yes, we did.

30:11Yep. Yeah, yeah. And basically, as we said at the start, that was in the nutshell, is basically, you know, productive farmland, level playing field, these sorts of things, they're your main concerns. In a national direction, very welcome. It's just got to be stable. We farmers, especially, they plan in decades and not election cycles. So, yeah, reduce that red tape, give the certainty clarity, and hopefully it stands the test of time. That's that would be the aim, surely. Bring it just to finish up on. What else is happening in the pork sector at the moment that's worth noting? I think we're in a really unique situation. At the moment, pork is a very affordable, very good food. It's it's it's it's chance for a moment in your shopping trolley. It's tasty and it's cheaper. It's you can do some wonderful things like get on the website, look up some recipes, go experiment, get your barbecues out before the summer finishes. Yeah, and all the fresh stuff in your soup market, it's pretty, pretty certain to be

31:16from New Zealand too, so you don't have to worry too much about that. Just check your labelling on your ham and bacon. Check the labelling, that's the one. Good stuff, mate. Hey, this is nice to catch up with you again. I appreciate your time, all the best with everything. Thanks very much, Tom. Plenty happening today in rural focus. Firstly, we'll deal with the meat industry association. They have announced that Chief Executive Sermon Cutter Pever has resigned from the role. The chair, Nathan Guy is thanking her for six years in the role and says that she's led the organisation through times of industry challenge and growth. She joined the MIA back in 2015 and was appointed CEO in 2020. Also on the red meat front, I can tell you that the New Zealand meat board has confirmed Jane Meltsop as the new government appointee to the board and they've also fair-weld Sarah Patterson, who previously held that position. Also a story today from the Thuroughbred World, of course, regular listeners will know we had Gary Chittick, a bit of a legend in New Zealand's Thuroughbred

32:16breeding and he was on the program and obviously was the founder of Waikato Stutt. Now, cool more over in Australia, has purchased Waikato Stutt's proven science super-seth and a deal believed to be worth well north of $50 million and this horse super-seth has side four individual group one. One is three from his first crop, one from his second and has emerged as a leading New Zealand stallion who's been anointed as the successor to Waikato Stutt's champion Savibel. So that's an interesting development. They've said effectively that the decision was a business one and they're going to retain a share in the Coolfield Ginny's winner as well. The Waikato Stutt team, but yeah, the news stunned the industry by all accounts, the fact that one of our elite stallions has been sold to the Aussie breeding giant. That's a program for today, everybody. So thank you for listening. Thanks to all the contributors and a big thanks to

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